The impact of the 2007-2009 subprime mortgage crisis in the integrated oil and gas industry

Master's Thesis from the year 2009 in the subject Business economics - Investment and Finance grade: 69% University of Edinburgh language: English abstract: The years 2007-2009 the global economy has been affected by the subprime mortgages crisis which has its origins in the extremely risky positions that some banks and financial institutions held. When defaults in payments started and banks started facing problems in their payments lending between banks became more difficult and through the contagion of the global financial system the crisis spread around the world. This crisis affected many industries. The current paper attempts to examine the impact of the 2007-2009 subprime mortgage crisis in the integrated oil and gas industry. Energy and subsequently oil and gas are vital for many other industries as well as for individuals and households. The impact of the crisis is examined through a multimethod approach: Questionnaires which were sent to executives of oil and gas companies are analysed in the beginning followed by analysis of basic figures of the financial statements of the 200 biggest oil and gas companies. Findings are supplemented by the examination of the analysts' recommendations for a number of years. Finally the mergers and acquisitions between oil and gas companies are examined. This paper has the characteristic that it investigates an event which is still unfolding. As a result there is not established information about some topics such as the specific causes of the crisis. Therefore the emerging literature on some topics is analysed and specialists' reports are included to compare and contrast findings. Results show that even though energy and subsequently oil and gas are necessary for almost every industry the decrease in global demand as well as the lower oil prices will lead to a decrease in long term investing. Furthermore sales of companies are expected to be lower and this will oblige companies to find way